The political economy of emiratization in the UAE

Purpose – The purpose of this paper is to illustrate the difficulties of implementing emiratization, a policy that aims at increasing the participation of native workers in the UAE private sector by means of a government mandate. A second objective of the paper is to explore the conditions under which the emiratization policy can potentially increase the participation of native workers in the UAE private sector. Design/methodology/approach – An extension of the Ramsey Rule is used as a relevant application for this study to show that within the context of a break‐even constraint, any deviation between the wage rate and the marginal factor cost that is not proportional to the deviation between the marginal revenue product and the marginal factor cost could affect the firm labor demand and profitability. Findings – The theoretical models support the recommendations that the emiratization policy will tend to achieve some level of success in the short‐run, if implemented in firms that are operating in imperfectly competitive markets. In the medium‐run, a higher level of labor mobility for migrant workers could potentially increase employment opportunities for native workers. Originality/value – The literature on labor protection in the GCC is almost non‐existent. This paper explores conditions under which given an externally imposed constraint on native employment, the participation of native workers in the UAE private sector could increase.